Protect yourself from under-insurance - take out a
liability insurance policy
Worried about coverage for a rainy day? Get an umbrella
policy - what else?!
Do I Need Excess Liability Coverage? Don’t End Up Like Mary and
John!
John and Mary live in a nice five bedroom home located in
California. They’ve lived in their three thousand square foot home for
twenty five years and are retired. Their home is paid for and worth
about $900,000. They live off their retirement and have hardly no
bills to pay. John and Mary have always had a homeowners policy to
cover their home in case of fire, theft or other potential losses
involving their home. Mary is age 75 and John is age 72. They hope to
someday leave their home to their adult children.
On a nice spring day, Mary went to run some errands in her vehicle
around her neighborhood. She pulled into the parking lot of her local
grocery store. For some reason, after Mary parked her car, her foot
slipped off the brake and hit the accelerator instead. Mary’s car went
through the wall of the grocery store. Her vehicle continued through
the wall of the store and she collided into two pedestrians who were
standing in line with their grocery carts.
Both of the pedestrians were rushed to the hospital due to the
severity of the injuries they sustained from Mary’s car striking them.
Mary was upset about the accident and did not know what she should do.
She called her insurance agent the same day of the accident and her
agent took her information to start processing her claim.
Months later after the accident, Mary and John found out that the
damages filed by the two pedestrians injured from the accident,
exceeded the auto insurance liability limits that they carried with
their insurance company. John and Mary found out from their adjuster
that they would be personally liable for any money damages which
exceeded the liability limits that they carried.
The adjuster also told them that the pedestrians attorney did an asset
check to see if Mary and John owned property. The attorney found out
that they owned a home and would be expecting them to contribute
additional monies towards the settlement of the pedestrians claims in
addition to the auto insurance liability limits that they carried.
Mary and John were devastated and did not realize that their home the
most valuable asset they owned was at stake!
They worked all their lives for their home and could not believe that
it may be at risk due to the accident. John and Mary did not know they
may have avoided contributing monies towards the pedestrians injury
claims if they had excess liability coverage or an umbrella policy!
What is excess liability coverage or an umbrella policy? This policy
would be liability coverage which would exceed your homeowners or
vehicle policy for damages you may be liable for.
The cost of excess liability coverage or an umbrella policy is very
minimal for the amount of additional coverage you would receive. You
can expect to pay somewhere between $150-$400 annually for this
coverage. Consult your insurance company for details.
Remember, excess coverage is important for you to consider if your
assets are substantial, especially being a homeowner. This extra
protection may give you better peace of mind in the long run and will
be well worth it!
Copyright 2006 Nocita Carter
About the author
Nocita Carter is a writer and web designer that creates websites
providing informative tips on various subject matter including personal
finance tips on your personal finances at
www.personal-finance-tips-for-you.com
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